The 9th Circuit has revived PAGA case and has upheld wage break claims.
Walmart has been taking a lot of heat in court lately. Between an investigation into its prescribing practices launched by Texas AG Ken Paxton, to ongoing litigation over allegations of Walmart employees helping to fuel the opioid crisis, the company has its hands full. In the Texas case, AG Paxton has opened a civil investigation citing potential violations of the Texas Deceptive Trade Practices Act (DTPA) relating to the promotion, sale, dispensing and distribution of prescription opioids. The DTPA was enacted on May 21, 1973, and its primary purpose is to protect consumers against “false, misleading, and deceptive business and insurance practices, unconscionable actions, and breaches of warranty,” according to state records.
But Walmart’s legal problems don’t end there. Now, a U.S. appeals court restored allegations that Walmart Inc should have paid its employees at a California fulfillment center for time spent going through security checks after they had already clocked out. The lawsuit was filed as a proposed class action in California state court after plaintiffs realized they were spending a lot of time having to clear security before they were actually able to leave the center. It was determined they routinely waiting 15 to 20 minutes to be checked.
The plaintiffs added various PAGA (Private Attorneys General Act) claims after the company successfully removed the case to federal court in Riverside. The PAGA enables employees to file lawsuits against employers for wage law violations on behalf of the state and keep 25% of any penalties should they prove their case. PAGA plaintiffs can seek legal action against employers on behalf of large groups.
Ultimately, a three-judge panel of the 9th U.S. Circuit Court of Appeals voted unanimous that the workers were within their rights to bring the suit and that it was wrong to have originally found that the claim (part of a larger 2017 case brought by two employees in Chino) should be dismissed because it was “unmanageable.”
The court wrote, “Judges can impose a manageability requirement in lawsuits brought as class actions, but not to claims brought under California’s unique Private Attorneys General Act (PAGA) because the two actions are fundamentally distinct.” The 9th Circuit also stated “manageability requirements are imposed in class actions largely to ensure that damages can be distributed fairly to class members. But PAGA plaintiffs seek civil penalties, and not damages, so that principle does not apply.”
In a separate opinion in the same case, the 9th Circuit upheld a $6 million jury verdict against Walmart on a class-action claim that the warehouse workers “were deprived of full 30-minute meal breaks.” The company has faced a number of wage violation claims in recent years, including failure to pay Walmart employees overtime, minimum wage, and providing proper breaks. It has also been accused of retaliation against employees who attempt to speak out about these violations. The break issue went to trial, and a jury in 2019 awarded the plaintiffs $6 million for more than 450,000 separate violations.
Walmart continues to face a number of separate allegations in court over wage violations and claims that it helped to fuel the devastating opioid crisis. Its legal woes are far from over.
The PAGA case is Hamilton v. Wal-mart Stores Inc, 9th U.S. Circuit Court of Appeals, No. 19-56161 and No. 20-55223.